2 Gladiator Stocks To Buy As Recommended By ICICI Direct For Quick Gains In 3 Months

Greaves Cotton

The brokerage recommends buying this scrip in the price range of Rs. 138-148 for a target price of Rs. 170, maintaining a stop loss of Rs. 127. This stock buy at the current price of Rs. 154.25 can provide gains to the tune of over 10%.

In respect of the stock, ICICI Direct says, "the capital goods sector is regaining upward momentum after taking a
breather post swift up move in CY21. Within the sector, Greaves Cotton looks lucrative at current juncture as
buying demand in the vicinity of long term 200 weeks EMA coincided with regression line and key support zone
of Rs. 120-130, which has been held on multiple occasions in the last one year. Hence, it offers a fresh entry
opportunity with favourable risk reward

Fundamental view on Greaves Cotton:

Greaves Cotton (Greaves) is a leading diversified engineering company with a presence in automotive, non-automotive aftermarket, retail, electric mobility solution and finance. New business share increased to around 49% while engine reduced
to 48% in FY17-22. E-mobility is expected to drive future growth ( aroound 38% of FY22 revenue).
• The company reported a decent set of Q4FY22 numbers. Standalone revenue came in at Rs. 378.7 crore (vs. I-direct estimate of Rs. 441.2 crore), which declined 17.1% YoY. Standalone EBITDA of Rs. 29.1 crore (vs. I-direct estimate of |Rs. 44.6 crore),declined 38.5% YoY, impacted by restructuring, higher commodity prices. On a consolidated basis, EBIDTA came in at Rs.| 41 crore (vs. EBITDA of Rs. 42 crore in Q4FY21). Consequently, standalone PAT of Rs. 16.8 crore (vs. I-direct estimate of Rs. 20.6 crore) declined 29.6% YoY. Engine (auto, non-auto) volumes declined 41% to 25469 units' YoY Consolidated revenue grew 19.3% YoY to Rs. 620.8 crore. The engine segment revenues came in at Rs. 349.1 crore, declining 17.8% YoY. On the other hand, e-mobility segment revenue increased 243.5% to Rs. 237.29 crore. E-Mobility segment turns profitable in Q4FY22; EBIT came at Rs.7.26 crore vs. loss of Rs.| 11.2 crore in the same period last year. For FY22, E-mobility segment revenues crossed the Rs. 500 crore mark

Transformation strategy to increase E-mobility and new-initiatives business share to drive long term growth and help transform and de-risk its business. Consolidation of manufacturing operations into Megasites to bring higher operational efficiencies and reduced fixed costs in the long run. We expect revenue, EBITDA to grow at CAGR of around 13.6%, 76.8%, respectively in FY22-24E.

Hindustan Aeronautics

The buy on the stock is recommended in the price range of Rs. 1560-1592 for a target of Rs. 1805. The stop loss to be maintained is Rs. 1425. Given the current price of Rs. 1671.65,the potential upside in the stock is of over 7% in 3 months.

ICICI Direct's take on the stock

Defence PSUs have stayed resilient in recent corrective phase after multiyear breakouts early during the year. HAL stays our top pick in the sector as it remains in a structural uptrend and offers a fresh entry opportunity with favourable risk- reward after three week's correction

Key observation is that the stock, has held above its 50 day EMA post results. Now fresh buying demand
emerging after taking support at recent breakout area around Rs. 1500.This indicates inherent strength and
elevated buying demand that augurs well for the next leg of the up move We expect the stock to extend
outperformance and challenge lifetime highs in coming months and head towards Rs. 1805 as it is
measuring implication of range breakout(| 1200-1500=300) added to breakout of Rs. 1500

Among oscillators, weekly MACD is in rising trajectory, thus validating positive bias in coming sessions.

Disclaimer

The above stocks are taken from ICICI Direct report. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies and the author are not liable for any losses caused as a result of decisions based on the article.